Rich-door, poor-door debate heats up

The Manhattan borough president calls for an end to "segmented" residential buildings that were built using incentives for creating affordable housing, while a big developer argues that without that separation there would be no affordable for-sale units built.

The Manhattan borough president took aim at so-called "rich door/poor door" residential towers that allow developers to construct high-priced units while reaping a key zoning bonus in return for creating low-income apartments that are separated off and have fewer amenities, worse views and their own entrances.

"The Inclusionary Housing Program currently allows for developers to build what are called "segmented buildings," said Gale Brewer, the borough president, at City Hall on Friday afternoon. "I call on the city to change the segmented building option ... and I look forward to working with Mayor Bill de Blasio, the city's Department of Housing Preservation and Development Commissioner (Vicki) Been, and all stakeholders to find ways to ensure that future affordable housing development is as diverse as possible."

Some developers and housing-policy experts defended the current rule, stating that it is one of the key incentives encouraging developers to build affordable housing.

"Frankly, it's the only possible way to do inclusionary housing in a prime location," said developer Gary Barnett, whose new "two-door" building at 40 Riverside Boulevard., between West 63rd and West 64th streets, touched off the controversy. "You want to stand on a good principal, but you're going to lose hundreds of affordable units doing it."

40 Riverside Boulevard drew outcry when it was reported last year that the 33-story condo tower, which is now under construction, would have 219 units of luxury housing--many of those units with prime Hudson River views--while a 55-unit affordable-rental housing component would be created on the project's less desirable eastern side. The two sides would have their own separate entrances and different amenities.

Meanwhile, Mr. Barnett received a zoning bonus in return for building the affordable units. It is the granting of that perk that Ms. Brewer and affordable-housing advocates say should have required Mr. Barnett and other developers who build similar projects to integrate the affordable housing in with the market-rate units.

Just last week, Mr. Barnett's request for that bump in zoning was given a green light from the city's Department of Housing Preservation and Development. Mr. Barnett is not using those extra development rights to enlarge 40 Riverside Boulevard but plans to sell the air rights for cash.Ms. Brewer says she wants to change the rules and require developers like Mr. Barnett to intermingle the affordable apartments they buid with those that are market-rate rather than segregate the two.

"Changes can and must be made to the city's Inclusionary Housing Program to stop developers from segregating and segmenting buildings, separating affordable and market-rate units, creating separate and unequal communities of tenants within a single building," Ms. Brewer said.

Ms. Brewer pointed out that changes identical to the one she is proposing for the zoning bonus were made to another affordable housing plan, the 421-a tax incentive program, which offers developers low-cost financing and real estate tax breaks in return for creating affordable units. According to Ms. Brewer, that program was revised in 2007 to force developers who take advantage of it to locate affordable units in with the market-rate apartments they build and disallow segregation.

"The city didn't amend the local inclusionary housing program to fully effectuate that change," Ms. Brewer said referring to what she said is a lingering loophole for the zoning bonus. "That was a mistake, but it is one the city can rectify.

Mr. Barnett said that 40 Riverside Boulevard wouldn't have penciled out financially if he had to intersperse the units and swap a condo with water views that might command millions of dollars in the market for an affordable unit that could only sell for a fraction of that. That's because the project is on the Upper West Side, he said, where land costs are high and developers need to sell as many high-priced units as they can to recoup their expenses.

"I think it's more important to get the affordable units than change the optics of this," Mr. Barnett said.

Correction: The Manhattan borough president took aim at so-called "rich door/poor door" residential towers. Developer Gary Barnett will receive a zoning bonus in return for creating affordable rental units at 40 Riverside Boulevard. The project will feature for-sale market-rate condos and affordable-rental units. Those facts were misstated in an earlier version of this article published online July 25, 2014.